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Business Law, Public Responsibility, and Ethics Commons

Open Access. Powered by Scholars. Published by Universities.®

1996

Business Organizations Law

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Full-Text Articles in Business Law, Public Responsibility, and Ethics

Corporate Governance And Managerial Incompetence: Lessons From Kmart, D. Gordon Smith Apr 1996

Corporate Governance And Managerial Incompetence: Lessons From Kmart, D. Gordon Smith

Faculty Scholarship

Modern corporate governance scholars often extol an activist role by institutional investors in directing corporate activity. Widely viewed as a solution to the collective action problems that inhibit such activism by individual investors, institutional investors are praised for adding value to corporations through their participation in the decision making process. The ouster of Joseph Antonini as Chief Executive Officer of Kmart Corporation in 1995 might be taken as a vindication of this view, because substantial evidence indicates that institutional investors played a crucial role in influencing Kmart's board of directors to remove him. In this Article, Professor Smith challenges ...